Motley Fool Hidden Gems Investing - Economic Hurricane? Just Keep Buying

Episode Date: June 3, 2022

Microsoft lowered guidance, Elon Musk has a “super bad feeling” about the economy, and Jamie Dimon warned investors that a hurricane is coming. (0:30) Jason Moser and Ron Gross discuss: - Why short-term trading in and out of the market is NOT the answer - Okta’s strong results and optimism for the rest of the fiscal year - Lululemon’s online sales growth - Ford Motor CEO Jim Farley’s comments on plans for the electric vehicles - The latest from Chewy and Salesforce (19:00) Nick Maggiulli, COO of Ritholtz Wealth Management, discusses insights from his book “Just Keep Buying: Proven Ways to Save Money and Build Your Wealth”, why it’s important to splurge, the data behind retirement savings, and much more. For a copy of his book click here - https://www.amazon.com/gp/product/0857199250 (35:30) Jason and Ron share two stocks on their radar: Uber and Titan International. Stocks discussed on the show: MSFT, JPM, TSLA, OKTA, LULU, CHWY, RH, CRM, F, UBER, TWI Host: Chris Hill Guests: Jason Moser, Ron Gross, Nick Maggiulli Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. Cybersecurity, software, automotive, retail, and more. If you're an investor, you're in the right place. Motley Fool Money starts now. everybody needs money that's why they call it money from fool global headquarters this is motley fool money it's the Motley Fool Money Radio Show. I'm Chris Hill, and I'm joined by Motley Fool Senior Analyst Jason Moser and Ron Gross. Good to see you as always, gentlemen. Hey. How are you doing, Chris?

We've got the latest headlines from Wall Street. Nick Maggiuli from Ritholtz Wealth Management is our guest. And as always, we've got a couple of stocks on our radar. But we begin with the week in guidance. On Thursday, Microsoft officially cut their guidance for the current quarter, citing the impact of foreign exchange rates. Earlier in the week, JPMorgan Chase CEO Jamie Dimon said investors should brace themselves for an economic hurricane and that his company is planning to be very conservative with their balance sheet. After telling executives at his company that he expects them to be in the office five days a week, CEO Elon Musk said he has a super bad feeling about the economy and plans to cut 10% of the jobs at Tesla. Ron, let me start

with you because we got the monthly jobs report Friday morning. I think that's an important data point. But increasingly, I find myself paying more attention to what large companies are saying and doing. Yeah, I think that's fair. Macro reports certainly can be interesting, but they're sometimes hard to decipher. They're even harder to predict where they're going to go next. It's safer and I think easier, quite frankly, to focus on what management teams are telling us about their companies. For now, based on your read right there, it certainly seems like they're telling us that weakness is here and accelerating. Economic hurricane doesn't sound that good to me, Chris. Now, I do think it's important to note that management teams don't have crystal balls either,

and they tend to overcorrect. What they see now and what they predict into the future doesn't always come to fruition, and sometimes they can either be too conservative or go the other way. But it certainly pays for us to listen, especially about the companies we're watching closely. Specific to something like Microsoft, which is mostly a bringing down of guidance because of the strong dollar and the foreign currency impacts of that, they really only cut revenue guidance by less than 1%. And they cut profit guidance by a little over 1%. So we can take this in and we can understand what they're doing. I don't think we need to panic, especially if it has nothing to do with the operating business and it has to do with something macroeconomic like a

strong dollar that is largely out of their hands unless they're going to hedge. Jason, to what Ron was saying there in terms of companies maybe over-correcting, think about what Jamie Dimon said, how conservative they plan to be. We've been saying this for a while on this show, this is one of those times where there isn't really an incentive companies to be anything but conservative right now. Well, I agree. And I think in regard to looking at macroeconomic reports versus boots on the ground, I mean, remember, right, the Fed also was saying on repeat here for the last several months that inflation was going to be transitory, right? We've seen how that played out. So it's all to say, you got to take those types of things

with a grain of salt. Look at the actual conditions on the ground. That's how I prefer to at least take it. And I think ultimately what it does as investors, it gives us obviously a more holistic picture, but it certainly feels like there are reasons to at least consider subscribing to Diamond's hurricane theory, right? I mean, when you look at consumer sentiment at its lowest point, I think in something like a decade, when you look at the personal savings right now at 4.4% lowest since I think 2008, you consider inflation, you consider the confluence of events that are going on all over the world. And all of the things that are, generally speaking, really out of our control, right? The Fed can only do so much to try to help tame inflation

and keep things moving toward that soft landing we talk often about. I think it only makes sense to really actually look at what the companies are doing, because I think they honestly are the ones with a better look into the real economy and what's going on. And so we've talked about this for a while. I mean, it does feel like while we've had this labor market where it's tough to fill jobs, at some point that flips, right? The shoe goes on the other foot. It feels like that moment is getting closer and closer. And I will say with respect to using macro in your individual company analysis for something like foreign currency impacts, we tend to not really focus on that too much because there will be years where that will be a benefit and there will be years

where that reduces profits. And in the end, for long-term investors, for people that hold companies for long periods of time, those will even out over time. And so, we shouldn't be thinking about trading in and out because this year the dollar might be strong or next year the dollar may be weak. As long as we're holding companies for the long term, I think we'll be fine. All right, let's get to some notable earnings this week. And we'll start with Okta. Shares of the ID authentication company up more than 15% this week after strong first quarter results. Okta also raised their earnings guidance for the full fiscal year, Jason, kind of notable considering the environment we're in.

Yeah, obviously, one of the companies that has had a bit of a tougher year as it continues to work its way toward profitability and sustainable free cash flow growth. But this was certainly another encouraging quarter as they continue to really forge that value proposition in organizations, IT, and security strategies. When you look at the numbers, new revenue, $415 million, that grew 65% from a year ago. This is a subscription business, which is really nice, but that easily outperformed their own guidance they set just a quarter ago. Their subscription backlog now at $2.71 billion, that was up 43% from a year ago. And like you mentioned, boosting full-year guidance just a tad, that's nice to see. And calling for revenue now

for the full year of just over $1.8 billion, that would represent a growth of 40%, assuming they hit that target. No reason to believe that they won't, particularly when you look at the customers they're bringing on. They added another 800 customers bringing their total customer base to 15,800. That was up 48%. Again, as we look with a lot of these companies, the big customers, the customers that are spending $100,000 plus per year, that stands now at over 3,300 and grew nearly 60%. I think all things considered, the business is doing very well. The big risk is obviously a security breach and they did have an incident over this past quarter. It's worth noting, they said based on their own assessment there, it had what appears to be

a negligible effect on the business, but that's something always to keep in mind with a business like Okta. Online sales growth highlighted a strong first quarter report for Lululemon Athletica. Profits and revenue were higher than expected. The company also raised guidance for the full fiscal year. Despite all that, shares of Lululemon were basically flat this week. Ron, is Wall Street not entertained? It's curious a little. Yes, the report was better than expected, but margins were weak. But you might expect that margins would be weak for a retailer because they are for all retailers. in the environment we're living in. Perhaps it wasn't strong enough to overcome

those thoughts and investors just weren't impressed, but it was a solid corridor. Revenue up 32%, comp sales up 24%. As you said, direct-to-consumer, very strong at 32% growth. Now, the direct-to-consumer revenue represents about 45% of total revenue. That is pretty strong. Now, management has been raising prices on selected products to offset higher costs from, as we say, the global supply chain disruptions, as well as increased raw material costs, labor costs, freight costs. It's a trifecta of higher costs. CEO Calvin McDonald said the company has not seen any negative impacts on its sales volume as a result of those price increases. So, Lululemon exhibiting some pricing power. It is a premium product. It is a luxury

product. Perhaps their customers are not as price sensitive as in some other areas. But because of those higher costs we mentioned earlier, gross margins fell, adjusted operating margins fell. When you boil it all down, earnings per share are still solid, up 28%. Now, finally, they're seeing a modest impact from lockdowns in China on the stores. Some vendors are struggling. But the overall impact on the quarter was more than offset by strengths in other regions. Growth plans remain on track for 40 new stores in mainland China. Let's keep an eye on that. But as you said, they did raise guidance. Trading at 32 times full-year guidance right now, a premium price, but for a premium company. The automotive wars just got a lot more

interesting. Details after the break, so stay right here. You're listening to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. Signs of life from Chewy this week. First quarter profits for the pet retailer were much higher than expected, and shares ticked up a bit as well. Jason, this is another one of those companies, rough year for the stock. But you look at the underlying business, it does seem to be improving for Chewy. Rough year. I see what you did there. That was not intentional. I swear that was not intentional. I didn't say it coming. I don't believe you. Well, Chris,

listen, the love of our pets is stronger than any bear market. Stock performance notwithstanding, it really does look like Chewy's business continues to deliver the goods. I know they're delivering them to my house, and judging by the numbers, I'm not alone. Revenue of $2.43 billion was up 13.7% from a year ago. They brought in $6.4 million in free cash flow. A little bit of a concern on the gross margin side, 27.5%. That was down 10 basis points, not a whole heck, nothing really terrible there. But it's worth noting simply because they are recognizing some headwinds there on the cost side, supply chains, inflation. That is something that plays out on this business to an extent. But the auto-ship customer sales increased to 72.2% of total sales. That's a new

record that's up from just over 69% from a year ago. That's strong retention. That's a reliable revenue stream when people just hit that auto-subscribe button and just have that food. Those pet goods just appear as if from nowhere every month on their doorstep. Active customers was up 4.2% from a year ago. They now have 20.6 million active customers and net sales per active customer grew 15%, reached an all-time high of $446. They continue to leverage their marketing and ad spend, bringing that down as a percentage of revenue that will contribute to profitability as they get there. Guiding for 16% revenue growth at the midpoint here, they will break through $10 billion in revenue this year. With shares valued now at around

1.3 times sales. It's been, like you said, a tough year for the business. But honestly, this looks like a really interesting opportunity for a business with obviously a very resilient market opportunity in pets. I think investors looking for some specialty retail, keep your eyes on Chewy. There was a lot to like in the first quarter results from RH, but the luxury home furnishings company said it expects second quarter revenue to drop, and shares fell a bit on Friday. Ron, RH has been such a strong performer for a long time, but this is another one where 2022 has been a rough year for the stock. Yeah, exactly. Down 60% from its 52-week high, but even with that, still up 600% over the last

five years. This is a strong report, but there clearly are some things to be concerned about. Revenue was up 11%. That's not too bad. Then gross margins increased. That's interesting. The product margins increased, and the company was very careful to hold prices steady, even though demand began to weaken. Now, it's risky not to keep pace with the discounting that is going on across the industry there, but management sees the bigger risk being brand erosion and model destruction as they want to maintain that premium price point. As a result, though. Operating margins fell. I shouldn't say as a result. As a result of new investments, operating margins fell. They're introducing new concepts, things like RH Guesthouse,

which is their first introduction into the hotel industry, the hospitality industry. They have one location so far, if you're interested in a luxury overnight stay. But again, a solid report. Net income up 54%. Guidance was soft. That's what we have to watch. They see second quarter revenue down 1% to 3% with margins further eroding, full year revenue growth of only 0% to 2%. So that's what's troubling here. They did authorize a large $2 billion share repurchase program, only 12 times earnings right here if you want to take a little bit of a flyer on business firming up a year or two from now. I don't want to question management that has done such a good job for so long, but why would you launch your own luxury

hotel when it seems like a partnership opportunity with an existing chain seems like an easier lift, doesn't it? Yeah, it's a very expensive proposition to enter into. You would want to see them stick to their knitting. They only have probably, I want to say, 67 or so galleries, and there's plenty of room for expansion here if they just would stick to their knitting, but they seem to be really moving into other areas pretty heavily. That's where the costs kind of add up, and that's where have to be careful. Great week for Salesforce. First quarter profits and revenue were higher than expected. They raised earnings guidance for the full fiscal year and shares of Salesforce rose more than 10% this week, Jason. Yeah, really nice week for Salesforce.

It really is a testament just to the value in this business. The market they pursue in customer relationship management, getting data from all of these different communications channels today, helping businesses learn more about their target audiences, which ultimately helps this business retain customers, drive sales. Salesforce is the No. 1 player in the space there. These numbers, really, I think just are a testament to that. Revenue $7.4 billion, up 26% from a year ago. Operating cash flow $3.7 billion, it was up 14%. They did update full-year revenue guidance, they got it down just a tick. That ultimately though, primarily due to currency effects. They mentioned places like Japan and the call. I think that speaks back to Microsoft's recent

revised guidance. I don't know that I'd worry too much about that. Because when you look at the business itself, everything seems to be, as Ron would say, firing on all cylinders. Their sales cloud and service cloud businesses are both $6 billion plus businesses. They grew 18% and 17% 17% respectively. Slack, the acquisition they made not too long ago, outperformed internal expectations, brought in $348 million in revenue for the quarter versus their expectations of $330 million. Going back to those big customers, that number of customers spending more than $100,000 annually grew 45% from a year ago. The data cloud business continues to perform those acquisitions of MuleSoft and Tableau, that segment of the business grew 15% from

a year ago. You put that all together, while they did guide down on the revenue side, just a tick revenue for earnings per share, now 475 at the midpoint. That value shares today at around 38 times full-year earnings projections. While I wouldn't say that's cheap by conventional standards, remember, number one, this is a leader in its market. Number two, it actually money. I think when you put that together, it looks like a reasonable multiple for such a strong business for folks looking for some opportunity in that tech space. This week, Ford Motor CEO Jim Farley said he wants to make it easier for customers to buy his company's electric vehicles. Farley said he wants Ford's EVs to be sold exclusively online

with no dealer markups or price negotiations. As for marketing, Farley said their EVs are so popular, they're already sold out. Quote, if you ever see Ford Motor doing a Super Bowl ad on our electric vehicles, sell the stock. Ron, bold words from someone not known in his industry as being the loudest talker. Among other things, it seems like Farley is gunning for Tesla. You know, more so than gutting for Tesla, I think he just sees the current business model as somewhat antiquated. And a change could be a win both for the company, Ford, as well as the consumer. They said that the current distribution model adds around $2,000 in extra costs per car compared to Tesla. A third of that cost is tied up in inventory. Another third is spent on

advertising. And so unlike Tesla, which has been able to sell directly to consumers, the traditional manufacturers have not been able to. I didn't know this, but there are laws written into some of the states that doesn't allow car companies to go directly to consumers. So the franchise dealers are going to have to play a role, I think, at some point, unless we get the laws changed. All right, Ron Gross, Jason Moser, guys, we'll see you later in the show. But up next, author Nick Maggiuli has three important words of advice for investors. So stay right here. You're listening to Motley Fool Money. Kentucky back in 49 and went to Detroit working on assembly line. The first year they had me

putting wheels on Cadillacs. Every day I'd watch them beauties roll by and sometimes I'd hang my head and cry because I always wanted me one that was long and black. One day I devised myself. Welcome back to Motley Fool Money. I'm Chris Hill. Nick Maggiuli is the Chief Operating officer at Ritholtz Wealth Management. He's the creator of the popular blog of Dollars and Data, and he is the author of the new book, Just Keep Buying, Proven Ways to Save Money and Build Your Wealth. He joins me now from New York City. Nick, thanks for being here. Thanks for having me on, Chris. Bunch of things I want to get to. Let's start with the book. I think you've pulled off something

rare when it comes to this category of books, and that is, this is a book about money and investing that I think is really for everyone. You know, it's for younger people who are just starting out. It's for people who are starting from square one financially. It is, you know, there are parts of this book that are very much for people like me, sort of older people getting closer to retirement. All these different ages and groups, you've managed to write something just for them. Was that your intention when you started the book or was that something that you just sort of realize through the process of writing it? Yeah, I think I wanted to make sure I had like a very big market because I think, you know, in the first chapter, I talk about this

thing called the save invest continuum. And that's basically like how much money you're saving versus how much your investments can earn you. And basically which one of those is higher basically tells you where you are in your financial journey, where you should be given, you know, given you've been saving for a long time. And so what I realized was that one idea, like if you, if you can save a lot of money, but your investments aren't earning you a lot, you're probably very early in your career and you have maybe high income. But if your investments can earn you a lot of money, but it's really hard for you to save more to keep up with that, then you're probably later in your career. You're probably retired. You're probably a very big nest egg that's earning you a lot of

money if the market goes up 10%. Let's say I'll use an extreme example. Let's say you have $10 million. Market goes up 10%. That's now a million bucks. It would be very difficult for someone who's 22, 23 years old to save a million dollars after tax. That simple idea became the framework for the entire book. And that's how I wanted to frame it. I wanted people to be able to take anyone, be able to read it and take something away from it. Now, of course, not everything's going to be applicable. If you're 70 years old and you're not working anymore, you don't need to learn about savings. So I say skip that section. So that was the idea. Keep it as broad as possible for everybody. Right. I do love that. It's the first time I can remember an author just

openly telling the reader, you can skip this if you want. This might not be for you. You can skip to chapters later in the book. There's so much data in the book, and yet there really are some emotional underpinnings, and we'll get to those in a second. But part of what you do in this book is use data to make different points about saving and investing. I mean, it's right there in the title for anyone who didn't clue into that. I mean, just the idea that the way to financial independence is to consistently buy over time. There are a couple of myths that you've sort of used data to bust, I guess. Was there a part of the book that was more fun for you to write? Yeah, I think my favorite chapter was chapter 17, which was talking about buying during a crisis,

which is basically like this idea of like when the market's down badly, like how do you kind of keep yourself motivated and how do you reframe thinking about purchasing when the markets are down bad so that you can keep the faith and keep buying. That's really because I think it's the toughest thing to do is when you see markers down 15%, 20%, 30%, 40%, 50%, how do you keep the faith and not just give up on everything? That's where that came in. That was my favorite chapter to write. I think the most surprising chapter was the second one where I realized there isn't this major retirement crisis like we're told in the mainstream media. When only one in seven retirees are selling down the principal in their assets or have their nest egg, six out of seven are living

off social security and just the, and what the investments are generating. Right. So it's actually kind of a surprising result after I saw that I was like, how is that possible? Right. Obviously there are people who are struggling, so I'm not here to like minimize that, but I don't think there, it's not a general retirement crisis. It's a crisis that's affecting a smaller subset of the population. And therefore our policy responses should be said to those people and not to, there's not a huge retirement crisis. Like I've heard for so many years. I'm assuming for For people who are older and in that situation, there has to be an adjustment that goes on there. If you've been someone who's just worked and methodically saved and invested over time,

when you actually retire, I'm assuming there's an adjustment of, oh, wait, should I be spending money because I don't have an income now? Yeah. That's why it's scary. It's really scary for people. This is true of anyone, even people who have a lot more higher net worth and things like that. We have clients where it's tough. We have to teach them how to spend money. You think about it, if someone's a very good, diligent saver, let's say the 80th, 90th percentile on saving, and now they have to go and go from that to flipping the switch to the other side, it's really, really tough, especially if they have a lot of money. It's like, wait, I can spend two or three X what I've ever spent in my life, and I still won't run out of money.

It's like, yeah, that sometimes happens. And for younger people who are just starting out, I like the fact that you make the point in the book. Your savings rate shouldn't be static because your income is not static. And that also goes against, you know, what some people advise that it's like, no, you have to have this rigorous savings rate, no matter what your income. Yeah. I think it just creates guilt for you one way or another. So like, if you're like, oh, I saved 20%, I have all this extra money. I might as well spend it. Right. It's like, you're going to be wasteful in some circumstances. And then in times where it's tough, or maybe you're going through, you had a job loss or something like I, or you had your income got

reduced. You have to, and you're trying to save 20%. And then you're like feeling guilty every time you spend money. It's like you lose on both ends, right? It's like, no, you should just save what you can. And so, and if you're like, I'm not saving enough, then you need to increase your income so that you can, that's really my, I think that's the sustainable path outward. That's the long-term path. It's not a short, the best short-term solution is to cut your spending, but that's really, really difficult. And I, and I explain why that's difficult. So you can do that in the short term, but the long run path is income. And I think the data is overwhelmingly in support of that. Thank you for pushing back on the more extreme elements in the financial

media universe who advocate a Spartan lifestyle that never involves treating oneself to a cup of coffee. I appreciated that. Along those lines, what do you splurge on? I know you live in New York City. You don't have a car. When you're looking to treat yourself, what form does that take? Restaurants. So I like going to nice restaurants. And for me, it's like I would say if I told people some of the amounts I've spent at restaurants, it's an exorbitant amount of money, but I don't spend money on other things, right? It's like this t-shirt, it's like 20 bucks, right? I don't have super nice clothes. I don't have a car, right? You know? And so I think most of my, most of my money spent obviously on rent is New York city, but then where I'm actually

being exorbitant is probably restaurants. I just, I just like experience going out, things like that. Let me get to a couple of the chapters. Um, and one that when I looked at the table of contents before I even started reading the book, the chapter heading that leaped out to me was why you shouldn't buy individual stocks, which once I read the chapter, because I read that and I thought, oh boy, are we going to get in a fight here if I interview Nick? But what I realized is that among other things, you're a kindred spirit of our mutual friend, Morgan Housel, that it's just for you. Let's face it, for a lot of people, it's not necessarily about the finances. It's also about the emotions that go into buying individual stocks. Yeah, I think a lot of it. We can talk

about the performance stuff. We can talk about the SPIVA reports, S-P-I-V-A. You can look those up and you can see performance stuff. But let's put that aside. Let's not even talk about the financial aspects. I think the tough part of having most of your wealth and just a handful of individual stocks is just like, it's an existential issue. Like Chris, if you and I picked a basket of stocks and we waited a year and yours and your basket was higher than mine, like, does that are a better stock picker? Like we can't say with certainty you might be in like, statistically, if we did that for three, five, 10 years, it probably, you'd probably be a better stock picker over the long run, right? Over a 10, 20 year period, for sure. We could identify that,

but there's still a lot of luck involved and that's what makes it tough for me. And so in so many endeavors in life, we can identify talent pretty easily and others. It's very difficult. And I think stock picking is one where there's so much luck involved that it's really difficult. And so for most people, I don't think you should be spending all your time in a place where you can't really identify if you're lucky or not. Now, of course, I'm not against people taking a small portion of their wealth, 5%, 10%, whatever, and putting it into individual stocks or doing it for fun. That's completely fine. But I think there's the portion of your wealth that you need to grow and you just need that to happen. Then you want to have fun with a little piece of

that's fine, but I just don't think most people should be having most of their money in only individual stocks, a handful of individual stocks. Is your approach broad-index ETFs, that sort of thing? Yeah. Cheap, broad-based index ETFs, and a lot of other things. Remember, that's not the only way. I'm not saying you have to own stocks. There are people that have gotten rich in real estate, there are people that got rich with farmland. There's a lot of ways to do this. I think that's another big misconception in the wealth building industry. It's like, Oh, I have the true path to wealth, but it's like, no, you're, that's not true. Cause I know so many rich real estate people that don't even touch

stocks. I know so many rich stock people that don't even touch real estate and vice versa. So it's more about finding what works for you. So for example, I don't think I'm ever going to own any real estate outside of my own primary residence. I don't think I'm ever going to own like an investment property. Cause I don't want to deal with tenants and all that. I don't like that personally. So that's just my personal thing. Of course that may change, but that's just how I feel some people love that and they say, I don't want to put a lot in stocks. I really would rather manage properties. And so that's great for them. So I'm trying to kind of give you a plethora of options and then you can kind of pick and choose what makes sense for you. I think that makes more

sense than saying this is the only way to get rich. As I said, there's a ton of data that you do a wonderful job of bringing to light in the book. But I think for my money, one of the most important chapters is late in the book, a chapter entitled why you will never feel rich. And for me, it was pretty illuminating because it's something that I've wondered about, particularly with seeing people either in the financial media or just in sports, entertainment, people who are exponentially wealthier than I am. And I have wondered like, wait, do they feel rich? Because I remember hearing Neil Brennan, the stand-up comedian, tell a story about the times in his life when he's been on a private jet and it is someone else's private jet.

Every single time he has been on someone's private jet and said something like, wow, this is really nice. Whoever's jet it is points to another jet at the private airport and says, well, yeah, this private jet is nice, but what I really wanted, I was kind of hoping to get that one. And I just thought, Oh my God, that's yeah. There's even among the super wealthy on some level, nobody feels rich. It's very true. And I think it's because you keep moving into social circles. As you gain more wealth, you probably start consuming slightly differently. You probably get into different social circles and move to a different address, whatever it is, you start getting into social circles where there's other people spending more money. You're

going to just run into richer people, right? As you start getting more successful, you're gonna get invited to different events, all these sorts of things happen. And you can always end up on that treadmill. So how do you kind of solve for that? You have to like, remember where you're from and think of your wealth and like absolute terms on always on this ever changing relative terms. Right. And so the example I use, I say, you know, if you have a hundred thousand dollars in net worth in the world, that puts you in the top 10% globally. Right. And I would say someone in the top 10% is rich. And now you'd say, well, Nick, that's not fair. You can't compare me to like random people elsewhere in the world. It's not a fair comparison. Like I, you know,

I understand an argument, but in the book, I talk about Lloyd Blankfein, who is the ex Goldman Sachs CEO. And he says, he's not rich. He's just well to do it, but he's a billionaire. But the issue is he's hanging out with people like David Geffen, Jeff Bezos, people who have, you know, 10, a hundred times as well. And so he doesn't feel rich relative to them. Now you're going to say, well, Nick, that his argument's ridiculous, but he's making the same argument. If I'm going to say, well, he's rich, you're saying, well, he's going to say, I'm not rich because you can't compare me to average people like you and me, Chris, he's going to say Like, oh, I'm a different, so he's using the same argument that we would use when we're

comparing us to people, like, let's say in the developing world, he's going to use that argument against us because, because we're not in his social circle. Right. And so I understand that. And so I'm not saying it's right. This is obviously a more outlandish argument on, on objective terms, but it's the same argument. We're just cutting hairs where like, what is rich really?

I mean, you can say I'm rich, but globally, but maybe you're not rich, you know, locally or some other way. Right. So it's just about realizing that, like, how do you define rich set some sort of absolute metric and then judge yourself based on that and your background and where you could be. That's the better way to do it instead of always chasing that feeling of trying to be rich and then never feeling it. Before I let you go, I just want to touch on your blog for a second. Again, the blog is online. It's called Of Dollars and Data. You wrote something earlier in the week entitled

Rallies to the Bottom. I was hoping you could just share a little bit of that with the listening audience because you unpacked some data that I think is worth keeping in mind. Yeah. So, you know, we just had, I mean, before this week, we had seven losing weeks in a row, and then we finally had a winning week. Thank gosh. Right. So now we have a, you know, S&P is now on a sort of positive streak, now broke the negative streak. But the issue is like a lot of times when you see that, like that could just be like a rally, but then we keep going lower. And the examples I went through, the four biggest crashes in U.S. stock market history, in the 1900s, which include 1932 was the bottom there, 1974, 2003, and 2009. When I looked at

those, all of those had at least three rallies of more than 10% gains before they continued their decline. For example, the Great Depression, which is obviously the worst, had an 89% total decline from top tick to bottom tick. But over that period, there were six separate rallies of over 10%. One of those rallies was a 48% gain. After that first big crash, that first big rally was you know, from that bottom, you gained about 48% from that local bottom. And then it kept going lower over the course of the next two and a half years. So it's one of those things where like, just because we have a rally, that doesn't mean we're out of the woods yet. So just keep in mind, I'm not saying, Oh, we should move to cash and didn't know. It's nothing like that. I'm not

trying to scare people. I'm just saying, you need to understand the nature of markets. If you want to be a good investor, you have to realize how these things happen. And we might have a rally to the bottom and it's terrible if it happens, but just be prepared for it. That's what you have to do. It's like recognizing what can happen and then acting accordingly. The book is Just Keep Buying, Proven Ways to Save Money and Build Your Wealth. It is available everywhere you find books and you should pick up a copy because it's great. Nick and Julie, thanks so much for being here. Thanks for having me on, Chris. Appreciate it. After the break, Jason Moser and Ron Gross

return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again with Jason Moser and Ron Gross. Guys, time to get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Jason Moser, you're up first. What are you looking at this week? Sure. Well, I feel like I told you on our recent trip to France,

it just reiterated to me the value, the necessity of a company like Uber in this day and age. I'm going with Uber this week as my radar stock ticker, UBER. Uber is just a mobile and digital giant. As the world becomes more connected, this company's market opportunity grows, plain and simple. They've got three primary segments of the business there, mobility, delivery, and freight. Also, a burgeoning advertising business there. Lots of different ways to cross-sell. Uber has reached verb status, much like Google. I don't think you can underestimate the power of that. They're also building out, interesting, I don't know a lot of people know this, they're building out a membership side of the business now, which I think is very compelling.

Members spend 2.7 times more than non-members and they exited 2021 with over 6 million members in total for their different membership offerings. I think when you put that all together, this is a business still getting its feet or its wheels underneath it, so to speak. A lot of opportunity left though as the world becomes more connected. This is what I'm digging into. Dan, question about Uber? Yeah, Jason, how's that total addressable market looking these days? Is it still literally everyone on the planet? It basically is. They refer to that mobility, delivery, freight, three multi-trillion dollar market opportunities as they quote it, Dan. Any which way you got it, take it with a grain of

salt, it's still a big one. Make no mistake, people, there are always going to be those things. We will never forget about certain companies. and in Uber's case, was it their S-1 filing where they said our total addressable market is every person on the planet? Awesome. They're not wrong. Ron Gross, what are you looking at this week? An update for those that have heard me talking about Titan International, TWI, industrial tire and wheel manufacturer for years, and maybe you even bought it on my recommendation. It's been a long road. I have been talking about

and owning the stock for nine years now. Patience appears to have paid off because of the current economic environment. Business is strong. TWI's order books are full through 2022 and 2023 could be even better, management says. The price of corn, soybeans, wheat, cotton near historic highs. There's no surplus out there, which should lead farmers to spend more on equipment for quite some time. Shares are up 75% this year. This year, in this market environment, at about $19 a share, only trading at 7.5 times their recent EBITDA guidance. Back in December, Titan's chairman pulled an interesting move by suggesting shares could be worth $24 a share. He's an interesting guy if you want to read some of his letters. According to him, still 25% upside left from here.

To be totally transparent, I did sell 10% of my stake earlier in the week. I still have 90% left. I will sell into strength if the stock continues to go into the 20s. Dan, question about Titan International? I'm just happy that old economy Ron is back in the driver's seat, the proverbial driver's seat, and is talking about Titan International again. What a great time to be an investor. Thank you, Daniel. Two stocks that are related in a lot of ways. Obviously, Dan, you got one you want to add to your watch list? I'll tell you what, Chris. What does every Uber need? That's right, tires. Every vehicle that doesn't have rails needs tires. I don't think tires are going anywhere. I think I'm going to

go Titan International this time, mainly because I like the stock price. It's very affordable. Very nice. Ron Gross, Jason Moser. Guys, thanks so much for being here. Thanks, Chris. That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.